Helio on course, reassures executive

January 30, 2008

The average Helio subscriber sends 550 text messages per month

Helio uses multimedia content and hip devices to appeal to young consumers. But can the mobile virtual network operator suffering recent bad press make up market share on data use alone?

The average Helio subscriber sends 550 text messages per month, and 95 percent of subscribers access the Internet through their mobile device versus an industry average of about 13 percent. It has average revenue per user of more than $85, above the industry average of $50.

“High revenue per user means that you don’t have to have the millions of users as other mobile carriers,” said Rick Heineman, senior director of communications at Helio, Los Angeles.

The company currently has nearly 200,000 subscribers. It recently announced annualized revenue of $240 million in its first year.

Also announced was that its founder and EarthLink CEO, Sky Dayton, stepped down to become non-executive chairman of Helio’s board of directors. Wonhee Sull, Helio's former president and chief operating officer, will move up as CEO.

To some, this development may not be that positive, as the recent media spin indicates. Helio’s Mr. Heineman contends that the company is just growing and otherwise nothing has changed.

Sky is an entrepreneur,” he said. “Sull is experienced in products and services. As the company matures it allows us to best utilize everyone’s expertise and focus.”

Analysts say that the move by Mr. Dayton signals that Internet service provider EarthLink may be pulling back on financial support to Helio due to declining EarthLink dialup subscriptions and challenges to the MVNO market.

EarthLink and South Korea’s SK Telecom invested $200 million apiece to launch Helio in 2006. EarthLink made its most recent investment in July, when both partners pledged up to $100 million and made immediate payments of $30 million.

SK Telecom has now invested an additional $270 million in the venture, EarthLink confirmed last week, which completes its pledge and adds $200 million.

Last November EarthLink said it would reduce its ownership in Helio to about 22 percent as SK Telecom stepped in to take a sizable portion of its share with new investment in the venture. At the time, EarthLink said it did not expect to invest any more in Helio.

Mr. Heineman denies that Helio has plans to change its agreements with EarthLink at this time.

Although Helio users are highly engaged in interactive mobile media, with above-average ARPU, its operating margin is several million dollars in the negative. The company plans to roll out new ad-supported services this year.